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Established in 1933 as a money-changing shop in Hong Kong, Hang Seng Bank is the second largest bank in Hong Kong. The bank is majority owned by the HSBC Group through The Hongkong and Shanghai Banking Corporation and is a Hang Seng Index constituent stock.

Although half of Hang Seng Bank's customers use online banking, there is still a strong demand for branch services. Photo: Martin Chan

Hang Seng Bank plans to further expand its branch network in Hong Kong this year in an effort to gain more customers.

The bank added three new branches and eight new Prestige Banking centres in the New Territories and areas near the MTR to capture mainland tourists as clients.

“We will continue this strategy of opening more new branches and upgrading the existing branch network,” chief executive Rose Lee Wai-mun said at a post-results briefing on Tuesday.

“Our study found customers still have a strong demand for branch services. Although half of our three million customers use internet banking, this does not mean the internet can replace branch services,” she said.

“Many customers like to talk to our staff with a nice cup of coffee to discuss their loans or investments. We will need to accommodate their needs.”

The bank has 220 outlets, including 100 branches with staff to serve clients. The rest have automatic banking machines but no staff.

The branch-oriented strategy is hindered by high rents and the difficulty of finding good locations.

Many customers like to talk to our staff with a nice cup of coffee to discuss their loans or investments

Rose Lee, Hang Seng Bank

Lee said, however, that Hang Seng now owns half of its branches, while the rest are also profitable in generating business.

On average, business grew 15 per cent at each branch last year, handily exceeding the 7 per cent increase in expenses, including higher costs for rent and headcount.

“These figures show opening new branches gives value for money and can bring good returns and bring in new clients,” Lee said.

The bank reported on Monday that its net profit rose 38 per cent to HK$26.68 billion last year thanks to strong growth of loans and fee income as well as a one-off accounting gain related to a mainland investment.

The bank, however, posted a 38.1 per cent drop in operating profit at its mainland operations as it incurred high costs in competing for deposits in the face of diminished liquidity as the central government tightened monetary policy last year. Lee believes the trend will continue.

The bank now has 50 outlets on the mainland, including, most recently, in the Shanghai Free Trade Zone. Lee said Hang Seng would further expand its network on the mainland and its yuan business.